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The difference is that functionOne is a function expression and so only defined when that line is reached, whereas functionTwo is a function declaration and is defined as soon as its surrounding function or script is executed (due to hoisting).

For example, a function expression:

// TypeError: functionOne is not a function
functionOne();

var functionOne = function() {
  console.log("Hello!");
};

And, a function declaration:

// Outputs: "Hello!"
functionTwo();

function functionTwo() {
  console.log("Hello!");
}

Historically, function declarations defined within blocks were handled inconsistently between browsers. Strict mode (introduced in ES5) resolved this by scoping function declarations to their enclosing block.

'use strict';    
{ // note this block!
  function functionThree() {
    console.log("Hello!");
  }
}
functionThree(); // ReferenceError

This article about Javascript Strict Mode might interest you: John Resig - ECMAScript 5 Strict Mode, JSON, and More

To quote some interesting parts:

Strict Mode is a new feature in ECMAScript 5 that allows you to place a program, or a function, in a "strict" operating context. This strict context prevents certain actions from being taken and throws more exceptions.

And:

Strict mode helps out in a couple ways:

• It catches some common coding bloopers, throwing exceptions.
• It prevents, or throws errors, when relatively "unsafe" actions are taken (such as gaining access to the global object).
• It disables features that are confusing or poorly thought out.

Also note you can apply "strict mode" to the whole file... Or you can use it only for a specific function (still quoting from John Resig's article):

// Non-strict code...

(function(){
  "use strict";

  // Define your library strictly...
})();

// Non-strict code...

Which might be helpful if you have to mix old and new code ;-)

So, I suppose it's a bit like the "use strict" you can use in Perl (hence the name?): it helps you make fewer errors, by detecting more things that could lead to breakages.

Strict mode is now supported by all major browsers.

Inside native ECMAScript modules (with import and export statements) and ES6 classes, strict mode is always enabled and cannot be disabled.